Deutsche Shell GmbH., a wholly owned member of the Royal Dutch/Shell
Group of companies (Shell), and
RWE have agreed to merge their
downstream businesses in
Germany into a joint venture. The proposed
venture, encompassing the refining, supply, distribution and oil marketing
activities of both companies and their associated support
services, will
enable Shell and DEA to achieve synergies of at least $150 million a year.
Both companies will initially hold a share of 50% in the joint venture. Shell
will have majority control from 2004 by acquiring an additional 1% bringing
its total shareholding to 51%. RWE, DEA’s parent company, will have the
option to sell its share (49%) to Shell. The deal is subject to the approval of
the EU regulatory authorities.
For Shell and DEA this plan is a decisive step in making their downstream
businesses fit for the future in a highly competitive market and to ensure
the delivery of innovative products and services to their customers.
Paul Skinner, Shell Group Managing Director and CEO Oil Products,
commenting on the Joint Venture said: “This proposed JV is entirely
consistent with the Shell’s global Oil Products strategy. It will result in a
leading downstream position in Germany, which we see as a key market in
Europe. It will also have a very high quality asset base and provides an
opportunity to strengthen our existing refining portfolio. These factors will
enable us to grow further shareholder value in Europe.”
Adrian Loader, President of Shell Europe Oil Products continued: “This JV
will have access to world class refineries, two strong brands, a nationwide
retail operation and a highly professional workforce. Altogether this
represents an excellent platform for further growth and development of our
strong European business.”
The planned JV is an important step in RWE’s strategy according to Dr
Kuhnt, Chairman of the Board, RWE: “The JV Shell & DEA Oil GmbH will
become a leading player in the German Downstream business. This JV
forms the basis to meet our customers’ expectations with regard to service
and quality and ensures secure and high quality jobs for our employees.”
It is likely that the merger will result in 750 net job losses from a total
workforce of 7,500. These will be subject to full consultation and achieved
through an agreed social plan. This will include early retirement, voluntary
redundancies and other employee schemes.
The deal also includes 45 DEA service stations in Poland, which will be
integrated into the existing Shell network. They will not be part of the
proposed JV.
The company will operate a network of about 3,200 service stations in
Germany, retaining both brands. The combined market share of 24% will
make the joint venture the market leader in Germany. The JV will also have
a network of complementary refineries located at the core of the European
marketplace.
The joint venture will become part of Shell’s European downstream
organisation and will operate according to the standards, systems,
processes and culture of Shell. The headquarters of the new company will
be located in Hamburg.